The semiconductor wafer chip industry has been in deep recession for recent years, but the this past year has been particularly bad. Research studies have revenue down 30 percent from last year. Within an industry with big capital investments, and extremely thin profit margins, this constitutes a disaster.
A semiconductor wafer is really a round disk produced from silicon dioxide. This is the form in which batches of semiconductor chips are manufactured. Depending on the scale of the patient chip and how big the epi wafer, hundreds of individual semiconductor chips could be made from just one wafer. More complicated chip designs can require greater than 500 process steps. Right after the wafer continues to be processed, it will probably be cut into individual die, and these die assembled into the chip package. These assemblies are utilized to make build computers, mobile phones, iPods, and other technology products.
Transitions to larger wafer sizes have invariably been a typical evolution from the semiconductor industry. In 1980, a modern fab used wafers which were only 100 mm in diameter (1 inch = 25.4 mm). The transitions inside the 1980s were in increments of 25 mm. Motorola MOS 11 in Austin (1990) was the first 200 mm fab, which was the very first time that an increment was skipped (175 mm).
It has long been challenging to get an early adopter of a new wafer size. The greater surface causes it to be harder to keep process consistency across the wafer. Usually the process tool vendors is going to be late to transition, and lose market share. Lam Research (LRC) grew tremendously on the transition from 125 mm to 150 mm, since their largest competitors during the time, Applied Materials and Tegal, failed to offer tools on the new wafer size. Intel and AMD were the initial two chip companies with 150 mm fabs, and both companies had little choice but to choose Lam. LRC quickly grew and permanently acquired the market.
Another element in the transition to larger wafers is process technology. If the semiconductor industry moves to a different wafer size, the most recent process technologies created by the tool companies will sometimes be offered only on the largest wafer size tools. In case a chip company desires to remain on the leading technology edge, it could be harder when it fails to manufacture with the newest wafer size.
The final wafer size increase happened in 2000 using the first 300 mm volume chip production facility. It was built by Infineon in Dresden, Germany. At that time, 200 mm wafers were the standard. It may not seem like a large change, but compound semiconductors has 250 percent more surface area compared to a 200 mm wafer, and surface directly relates to production volume.
By the end of 2008, worldwide, there was 84 operating 300 mm fabs, with 14 more fabs expected online in the end of 2009. Fab is short for “fabrication”, and it is just what the semiconductor industry calls their factories. Inside the second quarter of 2008, 300 mm wafers fabs passed 200 mm wafers fabs in production volume.
A 300 mm fab is substantially less expensive compared to a 200 mm fab for the very same capacity of chip production. Intel estimates which they spent $1 billion less on 300 mm capacity in 2004 than the same capacity could have cost instead by building 200 mm wafer fabs.
The thing is many small, and medium size companies do not need the amount of production that a 300 mm fab generates, plus they may not be able to afford the expense for a 300 mm fab ($3-4 billion). It is really not reasonable to invest this amount of cash rather than fully use the fab. Because the 300 mm fab is inherently more efficient compared to smaller diameter wafer fabs, there is certainly pressure for a solution.
For your small, and medium size companies, the solution has often been to close their manufacturing facilities, and hire a 3rd party having a 300 mm fab to manufacture their product. This is what is known as going “fabless”, or “fab-light”. The companies that perform alternative party manufacturing are called foundries. Most foundries will be in Asia, especially Taiwan.
Ironically, 300 mm was developed by Motorola and Infineon with a project called Semiconductor3000 in Dresden, Germany. This is a tiny pilot line which had been not capable of volume production. These two companies have suffered with their peers using their insufficient fore-sight. In 2000, Motorola operated 18 fabs and was the 5th largest semiconductor company on earth. Today, Motorola has divested their manufacturing into a company called Freescale that now operates just 6 fabs. Infineon divested their manufacturing in to a company call Qimonda. Qimonda has declared bankruptcy.
Brands like AT&T (Lucent), LSI Logic, Hewlett-Packard and Xilinx already have eliminated chip manufacturing. Companies like Texas Instruments and Cypress Semiconductor have set paths for the eventual elimination of most kgbapu their fabs. AMD (GlobalFoundries) and Motorola (Freescale Semiconductor) have separated their manufacturing divisions into independent companies, and profess a strategy to become without any fabs. Even Intel outsources its newest hot product, the Atom (used for “Netbooks”), to your foundry.
More than half from the fabs operational at the outset of the decade are now closed. With 20-40 fabs closing every year, there exists a glut of used production tools on the market, most selling at bargain basement rates.
Recently three from the largest semiconductor companies, Intel (microprocessors), Samsung (memory), and TSMC (foundry) happen to be planning for a transition to 450 mm wafers. A InP wafer should have approximately exactly the same edge over a 300 mm fab, that a 300 mm fab has spanning a 200 mm fab. It is actually undoubtedly a strategic decision to produce a situation where other-than-huge companies is going to be at a competitive disadvantage. Intel had $12 billion within the bank at the conclusion of 2008. Can AMD (GlobalFoundries), or comparably sized companies, afford a 450 mm fab ($6-10 billion)? No.
In the event the industry continues to progress over the current path, competition will disappear. The largest memory manufacturer will control memory, the biggest microprocessor manufacturer will control microprocessors, and the foundry business will likely be controlled by one company. These businesses already have benefits of scale over their competitors, however their existing manufacturing advantage will grow significantly.